Nikkei nearly flat; Pentax, Hoya in focus

Tokyo, Dec 22: The Nikkei average was nearly flat on Friday as investors took profits on concerns the market may have become overheated, selling Sony Corp and other recent gainers, while Mitsui Fudosan Co. Ltd. rose on a Goldman Sachs upgrade.

But Investors bought Pentax Corp. and Hoya Corp. after the two companies announced their merger on Thursday.

''Investors are alarmed that the market may be rising too high, too rapidly, and they are taking profits in stocks that have advanced,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities.

''Having said that, I don't sense that that would ruin the market's recent mood. Foreigners are still continuing their buying.'' The Nikkei was up 0.03 percent or 5.64 points at 17,053.47 as of 0058 GMT. The broader TOPIX index rose 0.02 percent to 1,671.71.

Kodama said investors are not buying stocks in one particular sector but focusing on ones that have lagged behind.

After the announcement of Hoya's plan to buy Pentax, optical glass maker Hoya gained 1.8 percent to 4,590 yen, while camera maker Pentax jumped 6.1 percent to 732 yen.

The two companies said on Thursday that Hoya would buy Pentax for about 91 billion yen (0 million) in stock, gaining access to profitable markets such as medical gear and optical lenses.

Under the agreement, one Pentax share will be exchanged for 0.158 Hoya share, the companies said.

UBS said in a report on Thursday that the share swap should cause about 5 percent dilution for Hoya, but the deal would give Hoya access to Pentax's image-processing technology and sales channels to the medical industry, allowing it to expand its medical operations.

UBS kept a ''buy 2'' rating on Hoya and kept its target price at 5,000 yen.

Mitsui Fudosan, Japan's largest property firm, jumped 3.1 percent after Goldman Sachs upgraded the stock to ''buy'' from ''neutral'' and added it to Goldman's Conviction Buy List.

Nikko Cordial Corp., a Japanese securities firm, was up 1.1 percent to 1,250 yen after it denied on Friday a newspaper report that two of its top executives were likely to resign to take responsibility for an accounting scandal that could possibly lead to the delisting of Japan's third-largest brokerage.

The Yomiuri newspaper reported on Friday that the company's chief executive, Junichi Arimura, and its chairman, Masashi Kaneko, could resign after regulators said the brokerage had improperly booked 6 million in profits. The paper cited several unidentified sources.

Nikko Cordial denied the report in a brief statement. ''The report is not true,'' it said.

REUTERS